Separate manufacturing units cannot be clubbed for excise without proof of financial interdependence or dummy status.

Clearances of two separately registered manufacturing units could not be clubbed for central excise duty merely because they shared common ownership, management, facilities, staff, records, or brand use. Separate registration with multiple authorities and the presence of machinery and infrastructure for manufacture supported their independence. The decisive factor was the absence of evidence of financial flow back or financial interdependence; without proof that either unit was a dummy or non-existent concern, clubbing was not justified. The revenue's demand therefore was not sustainable.

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Issues: Whether the clearances of the two separately registered manufacturing units could be clubbed for central excise duty purposes on the basis of common ownership, common management, common facilities, common brand use, and alleged absence of independence.

Analysis: The units were separately registered with the sales tax, income tax, industries, electricity, telephone and ESI authorities and were found to have the machinery and infrastructure necessary for manufacture. The existence of a common door, common office, common staff, common records, and a power of attorney in favour of the husband of one proprietor was held insufficient, by itself, to establish that the two concerns were one. The decisive consideration was the absence of evidence showing financial flow back or financial interdependence between the units. In the absence of proof that either unit was merely a dummy or non-existent concern, clubbing could not be sustained.

Conclusion: The clearances could not be clubbed and the revenue's demand was not sustainable.

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